The reintroduction of travel restrictions in response to the outbreak of the Omicron variant of the Covid virus in late 2021 weakened what looked to be a relatively strong year of recovery for airlines. Year-end figures for 2021 released Tuesday by the International Air Transport Association (IATA) painted a mixed picture of the industry’s global fortunes that the group’s director-general, Willie Walsh, argued directly related to governments’ approaches to the imposition of travel rules.
IATA called on governments to accelerate the lifting of all travel restrictions, including quarantine and test requirements for fully-vaccinated passengers, and allowing quarantine-free travel for non-vaccinated passengers with a negative pre-departure antigen test result. Also on Tuesday, Airlines for Europe and seven other air transport and travel industry groups called for European Union member states to set uniform Covid travel rules.
While demand for domestic flights last year had fallen by just 28.2 percent compared with the pre-pandemic year of 2019, international passenger demand finished 75.5 percent below par. Capacity for international flights—measured in revenue passenger kilometers (RPKs)—dropped by 65.3 percent and load factors declined by 24 percentage points to just 58 percent. By contrast, domestic demand fell by 28.2 percent over the same period, and capacity contracted by 19.2 percent as load factors softened by 9.3 percentage points to 74.3 percent.
News from the air freight sector was more encouraging as full-year demand increased by 6.9 percent in 2021 compared with 2019. A strong performance in December 2021 drove an 18.7 percent growth in demand compared with 2020, representing the biggest year-on-year improvement since 1990.
Taking encouragement from the very recent lifting of travel restrictions for countries such as France, Switzerland, and the UK, Walsh expressed optimism for a more sustained bounce-back from Covid this year. “The challenge for 2022 is to reinforce that confidence by normalizing travel,” he said, pointing to the overall strengthening in demand for travel last year, even in the face of the Omicron outbreak. “While international travel remains far from normal in many parts of the world, there is momentum in the right direction.”
IATA’s year-end statistics showed the Asia-Pacific region lagging behind other parts of the world, which the group said was largely explained by strict travel restrictions in large countries like China and Australia. “There was an almost total collapse of international travel in that region, while Europe accounted for about half of all international travel,” Walsh stated.
Walsh repeated his long-standing claim that travel restrictions have done little or nothing to tackle the public health emergency while inflicting unjustified damage on airlines. “There is no clear link between new cases and travel restrictions, which have often been maintained by governments even after the number of cases started falling,” he said, pointing to new research published by Edge Health and Oxera.
Looking ahead, IATA sees further pressure on airline balance sheets from rising operating costs, driven mainly by factors such as jet-A fuel prices, the price of which on January 21 stood at $103.01 per barrel of crude oil compared with $77.80 in October 2021. Walsh said that airlines are closely monitoring the trend and other increases in supply chain costs while acknowledging that any fuel price hedging arrangements will likely not compensate for the spike. He said the effect of the Omicron-related travel restrictions late in 2021 will likely undermine year-end airline earnings.
Asked to comment on the ongoing dispute between IATA member Qatar Airways and Airbus over reported faults with A350 aircraft, Walsh said that other airlines will look closely at how the manufacturer responds, seemingly implying that the situation might reflect a market imbalance. “When you have two [main airliner] suppliers, we need to ensure good healthy competition,” he commented. “Boeing has continued to have challenges, and the industry needs more credible suppliers and competition. I would hate to think that a supplier is taking advantage of its market strength and so we’re watching this closely.”
Acknowledging the unwelcome rise in incidents involving unruly passengers disrupting flights over issues such as face mask requirements, Walsh said that governments need to take the lead in addressing such difficulties. While praising individual airlines for imposing their own bans on disruptive passengers, he said data protection-related legal issues could complicate efforts to impose industry-wide blacklists and name-sharing by airlines.